Economics : 2019 : CBSE : [Delhi] : Set1
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Q1
In the given figure, the movement on the production possibility curve from point A to point B shows ________. (Choose the correct alternative)
(a) Growth of all the resources in the economy.
(b) Underutilisation of resources.
(c) Production of more units of Goods X and less units of Good Y.
(d) Production of more units of Good Y and less units of Good X.
Marks:1View AnswerAnswer:
(c) Production of more units of Goods X and less units of Good Y.
Explanation:
In the given figure, the movement on the production possibility curve from point A to point B shows production of more units of Goods X and less units of Good Y.
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Q2
Average fixed cost curve _______. (Choose the correct alternative)
(a) is a straight line parallel to X-axis.
(b) is straight line parallel to Y-axis.
(c) falls, as more units are produced.
(d) rises, as more units are produced.
Marks:1View AnswerAnswer:
(c) falls, as more units are produced.
Explanation:
Average fixed cost curve slopes downwards to the right. It shows that AFC decreases as output increases.
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Q3
Which of the following formula is correct for calculating marginal cost?
(a) MCN = TFCn – TFCN-1
(b) MCN = ACN – ACN-1
(c) MCN = AVCN – AVCa-1
(d) MCN = TCn – TCN-1
Marks:1View AnswerAnswer:
(d) MCN = TCn – TCN-1
Explanation:
Marginal cost is the addition to the total cost due to the addition of one unit of output.
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Q4
The average product curve in the input-output plane, will be ____(Choose the correct alternative)
(a) an 'S' shaped curve
(b) an inverse 'S' shaped curve
(c) a 'U' shaped curve
(d) an inverse 'U' shaped curve.
Marks:1View AnswerAnswer:
(d) an inverse 'U' shaped curve.
Explanation:
Average product refers to the output per unit of the variable factor used in the process of production.
The average product curve in the input-output plane will be an inverse 'U' shaped curve.
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Q5
If the market supply of a commodity X changes due to improvement in technology, the market supply curve will _____.( Fill up the blank)
Marks:1View AnswerAnswer:
shifts to the right.
Explanation:
If the market supply of a commodity X changes due to improvement in technology, the market supply curve will shifts to the right, as it causes an increase in supply at the existing price of the commodity.
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Q6
If the market supply of a commodity X changes due to rise in price of a factor input, the market supply curve will _______. (Fill up the blank)
Marks:1View AnswerAnswer:
Shift to the left.
Explanation:
If the market supply of a commodity X changes due to rise in price of a factor input, the market supply curve will shift to the left, as it increases the cost of production which leads to a decrease in supply at the existing price of the commodity.
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Q7
Identify and discuss the nature of the following newspaper reports in terms of positive or normative economic analysis:
(i) "India jumped 23 points in the World Bank's ease of doing business index to 77th place, highest in 2 years," – The Economic Times
(ii) "Government should further liberalise the business rules." – The Economics Times.
Marks:3View AnswerAnswer:
(i) "India jumped 23 points in the World Bank's ease of doing business index to 77th place, highest in 2 years," – The Economic Times
- It is a positive economic analysis
Reason: Positive economic analysis describes what was, what is and what would be under the given set of circumstances. Positive statements are capable of empirical verification.
(ii) "Government should further liberalise the business rules." – The Economics Times.
- It is a normative economic analysis
Reason: Normative economic analysis describe “what ought to be”. Its objective is to determine the norms. Normative statements pronounce value judgment or an opinion relating to right or wrong of a particular policy matter and it is always a matter of debate.
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Q8
Distinguish between substitute goods and complementary goods, with examples.
Marks:3View AnswerAnswer:
Substitute goods
Complementary goods
Substitute goods are those goods which can be substitutes for each other.
For example, gel pen and ball pen, tea and coffee, etc.
Complementary goods are those which complete the demand for each other and hence are demanded together.
For example: pen and ink, car and petrol, etc.
In case of such goods, increase in price of one causes an increase in demand for other and vice-versa.
In case of such goods, increase in price of one causes a decrease in demand for the other.
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Q9
Distinguish between normal goods and inferior goods, with examples.
Marks:3View AnswerAnswer:
Normal goods
Inferior goods
Normal goods are those goods in case of which there is a positive relationship between income and demand.
For example: Wheat, sugar, etc.
Inferior goods are those goods in case of which there is a negative (or inverse) relationship between income and demand.
For example: jowar, bajara, etc.
Other things remaining the same the demand for good increases with increase in consumers’ income.
Other things remaining the same the demand for good decreases with increase in consumers’ income.
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Q10
Discuss briefly, using a hypothetical schedule, the relation between marginal utility and total utility.
Marks:4View AnswerAnswer:
Total utility is the sum total of utility derived from the consumption of all units of a commodity.
Marginal utility is the additional utility on account of the consumption of an additional unit of a commodity.
Let us explain the relationship between Total Utility (TU) and marginal utility (MU) with help of the following hypothetical schedule
Quantity (in Units)
Total Utility (TU)
Marginal Utility (MU)
0
0
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1
7
7
2
14
7
3
18
4
4
20
2
5
20
0
6
17
-3
7
13
-7
As you can see, as more and more units of a commodity are consumed, the MU derived from each successive unit tends to fall, than it becomes zero and afterwards it becomes negative.
- As long as MU is positive, TU is increasing.
- When MU becomes Zero, TU is maximum.
- When MU becomes negative, TU starts declining.
